Real estate investors have a huge opportunity to make money on the fading American Dream of home ownership. There are approximately 80 million members of Generation Y and they are less interested in home ownership than any generation before them.
Survey after survey suggests that these uncertain economic times, in which many Millennials have reached adulthood, are shaping their views on debt and home ownership. Despite being the best-educated generation (63 percent have bachelor's degrees), Millennials are also the least employed (17 percent unemployment). Sadly, that education has saddled them with huge amounts of student loan debt and few prospects for paying it off.
Generation Y has a hard time seeing beyond the debt and therefore is primarily focused on getting rid of it. The thought of adding a mortgage payment to that pile of debt only pushes them further away from the thought of owning a home. The residence that is attractive to Millennials comes with built-in amenities and a landlord to take care of repairs and maintenance.
Investors see this as opportunity calling their name, snapping up single-family and multi-family investments in Central Oregon and taking advantage of the low vacancy rates, and tendency of many younger Bendites to rent rather than buy.
No one is sure how long Generation Y will prefer renting over owning. Some think the preference shift is permanent while others think once the economy comes back around so will the Millennials. Regardless of if or when it happens, there is still plenty of opportunity to make the most of a real estate economy that is advantageous for real estate investors. The decision to purchase a single unit or a multi-family unit can be a difficult decision, with several factors.
A single-family home offers some advantages over multi-family complexes that could be accentuated by the current real estate market.
Cost of entry: Houses are generally lower priced than multi-family rentals and financing is cheaper and easier to come by.
Ease of sale: The number of potential buyers for a house will always be larger than for a duplex or apartment building.
Appreciation: Appreciation for apartments is largely based on how well they are run and how much money they make. House prices are based on demand. Let's say in five years the economic tide has shifted and Millennials decide they are ready to buy a home. If you bought well in 2013, not only will your property have had positive cash flow for 60 months, the rising demand from homebuyers will add a nice bump to whatever appreciation was gained over that period.
Rising Rents: The growing pool of renters and the desire toward single-family homes will continue upward pressure on rent prices.
LOW
20028 Mount Hope Lane, Bend, 97702
3br, 2ba, 1148sf, 0.10-acre lot, built 2006
$224,900
Listed by Coldwell Banker Dick Dodson Realty
MID
21183 Clairaway Ave, Bend, 97702
4br, 2.5ba, 2560 sf, 0.12-acre lot, built 2005 | $325,000
Listed by Cascade Sotheby's International Realty
HIGH
60025 Ridgeview Dr. East, Bend, 97702
4br, 6ba, 8935 sf, 6.91-acre, built 1975
$2,150,000
Listed by COLM Commercial Real Estate
